Law: Income Tax Ordinance, 1979

Section: SecondSched.,Cl.77C,239(14)

Law: Income Tax Ordinance, 1979

Section: 151,159,239

Income Tax Ordinance (XXXI of 1979)---Second Sched., Part I, Cl. (77-C)---Income Tax Ordinance (XLIX of 2001), Ss.151, 159 & 239(14) [as amended by Finance Act (I of 2003)] & Second Sched., Part I---Investment in Regular Income Certificates issued by National Savings Organization---Deduction of withholding tax on profits distributed or to be distributed in future from such Scheme to investor---Validity---Such Organization as Collecting Agent of Revenue could not withhold any tax on such profits---Principles. Messrs Prosperity Weaving Mills Ltd. v. Federation of Pakistan 2006 PTD 402 fol. ORDER NASIM SIKANDAR, J.---The petitioner a company limited by shares has invested in Regular Income Certificates issued by the National Savings Origination Working under the Directorate of National Savings, Government of Pakistan. It is aggrieved of notices issued by the respondent No.2 National Saving Centre, Gulberg, Lahore as collecting agent and the respondent No.3. The Commissioner of Income Tax, Special Zone, Lahore expressing their intention of deduction of withholding tax at the rate of 10% from the profits paid under the said scheme with reference to rule 9 of Finance Division Notification S.R.O. 100(I)/93, dated 2nd February, 1993. 2. It is the case of the petitioner that profit/interest accrued on different National Savings Schemes has all along been exempt from levy of income tax. It is, therefore, stated that the Organization as an agent of respondent No.3, the Revenue could not deduct withholding tax with reference to the said S.R.O. which is claimed to be against the statutory exemptions granted to these schemes both under the late Income Tax Ordinance, 1979 as well as the Income Tax Ordinance, 2001 (for short the Ordinance). These exemptions, according to the learned counsel for the petitioner, were granted under various clauses of Part-I of the Second Schedule to the late Income Tax Ordinance, 1979. Also relies upon a judgment recorded by me in re: Messrs Prosperity. Weaving Mills Ltd. v. Federation of Pakistan 2006 PTD 402 to contend that the facts in hand are strikingly similar to those obtaining in the aforesaid eases in which it was held that…

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